Imminent and severe market correction

[gfresh]

I smell something further wicked this way comes... gold near vertical in the last hour.

 

[wayneL]

Lloyds TSB in takeover talks with HBOS.

Developing...

There are stories coming out that a deal is NOT going to be done.

Backed up by the fact that Crash Gordon has released an emergency statement via a spokesman, the the gu'mint will do whatever it takes to stabilize the financial markets.

Perhaps this is something to do with the gold spike?

 

[Kauri]

Heavy equity market selling, with the DJIA down well over 300 pts, and flight to safety and liquidity, with with short-term US Tsy yields tumbling, are for the moment resulting in more USD repatriation flows than dollar sales based on deteriorating US fundamentals.
Talk of an RTC-type plan to stanch the bleeding in the US financial markets and more importantly the housing market, is making the rounds, but the logistics of getting legislation of this type written, passed, signed and implemented before the presidential elections are daunting to say the least. That said, there is a growing sense that something preemptive and massive must be done soon by the government to stop the rot from spreading. , maybe a dose of Bushes favoutite shock and awe will do the trick..

Cheers
.........Kauri

 

[dhukka]

Heavy equity market selling, with the DJIA down well over 300 pts, and flight to safety and liquidity, with with short-term US Tsy yields tumbling, are for the moment resulting in more USD repatriation flows than dollar sales based on deteriorating US fundamentals.
Talk of an RTC-type plan to stanch the bleeding in the US financial markets and more importantly the housing market, is making the rounds, but the logistics of getting legislation of this type written, passed, signed and implemented before the presidential elections are daunting to say the least. That said, there is a growing sense that something preemptive and massive must be done soon by the government to stop the rot from spreading. , maybe a dose of Bushes favoutite shock and awe will do the trick..

Cheers
.........Kauri

Yep, seems there is a call to resurrect the RTC

Resurrect the Resolution Trust Corp.

....The fact is that the financial system needs basic, long-term reform, but right now the system is clogged with enormous amounts of toxic real-estate paper that will not repay according to its terms. This paper, in turn, is unable to support huge quantities of structured financial instruments, levered as much as 30 times.

Until there is a new mechanism in place to remove this decaying tissue from the system, the infection will spread, confidence will deteriorate further, and we will have to live through the mother of all credit contractions. This contraction will undercut the financial system, and with it, the broader economy that so far has held up reasonably well.

There is something we can do to resolve the problem. We should move decisively to create a new, temporary resolution mechanism. There are precedents -- such as the Resolution Trust Corporation of the late 1980s and early 1990s, as well as the Home Owners Loan Corporation of the 1930s. This new governmental body would be able to buy up the troubled paper at fair market values, where possible keeping people in their homes and businesses operating. Like the RTC, this mechanism should have a limited life and be run by nonpartisan professional management....

 

[dhukka]

Signs of capitulation appearing as the VIX nudges 35. This following story is the kind of stuff you want to see for real capitulation to set in.

How bad is it? It's actually pretty darn goodhttp://www.marketwatch.com/news/sto...0F-2256-4CB4-A1BA-9136F4112570}&dist=hplatest
Commentary: 'Buy when there's blood in the streets'

SAN ANTONIO, Texas (IndexRx) -- I just finished a telephone conversation with a friend who works for a large brokerage firm. He describes the typical mindset among his clients at the moment as one of panic and despair.
The average investor, it seems, is considering giving up on the stock market and burying his money under a mattress (or in money market funds). Should you too be thinking about the exit?

 

[noirua]

The Dow 30 is jigging around at the moment between down 360 and down 400. More interest in Gold now and the AU$1.28 to the US$1 is very interesting indeed.

 

[deadset]

Just one quick side track -

I'm not sure how the USD decides to start rising from July 15th when Bernanke's concern turned from growth to inflation and interest rates had been declared to have reached their bottom.

I can't recall interest rates changing in the US, so is the US dollar value rising simply from US investors pulling money out of foreign markets ?

What's the main driver of the USD going up recently ? I'm perplexed on this or is it simply going up as oil and commodities goes down ?

 

[CanOz]

Just one quick side track -

I'm not sure how the USD decides to start rising from July 15th when Bernanke's concern turned from growth to inflation and interest rates had been declared to have reached their bottom.

I can't recall interest rates changing in the US, so is the US dollar value rising simply from US investors pulling money out of foreign markets ?

What's the main driver of the USD going up recently ? I'm perplexed on this or is it simply going up as oil and commodities goes down ?

Call me crazy but one word comes to mind....intervention.

http://seekingalpha.com/article/95496-law-of-supply-demand-is-dead-for-gold-silver

Cheers,


CanOz

 

[Kauri]

Dow -2.0%; Gold up $83; oil +$2.30. Risk aversion still rife, the "fear trade" forced a mass influx into the gold market as US T Bills yield "nothing". Morgan Stanley and Goldman"s shares rebounded slightly from their lows. The Yen is no longer the driver, a massive cable buy order from real money drove USD lower across board. Same acct bought AUD and CAD. EUR/USD followed after EUR/GBP sold off initially. EUR/USD rebound triggered stops and has soared. Yen and USD being looked at as funding currencies. Commodity ccys have rebounded from lows, as mentioned real money demand for AUD & CAD.

Cheers
............Kauri

 

[noirua]

Well, the Dow 30 finished 449 points down on reflection on all these dud banking institutions still trading as ghosts in the night.

Halifax Bank of Scotland, one of the biggest UK banks was in fact bankrupt. Only the intervention of Lloyds TSB Bank, with unknown prompting from the Bank of England, may have saved the day.
If Lloyds pull out, then the UK Government may have to pour in untold billion of pounds.

Royal Bank of Scotland are also wobbling badly and could yet go down.

 

[mayk]

What are the chances of Morgan Stanley surviving till next week? The way things are going they might have to merge with another bank. Already NYT is saying they are in talk with another bank (Wachova). If that happens next in line will be GS, which also comes under the category of "too big to fail"...

1909 looks so similar to 2009. History indeed repeats itself, especially after a century...

And after that there will be a new beginning and a new rat race will follow. It is about time we enter 21 century and start off with new banks... Down with the old, in with the new

The good thing out of all this mess will be a better regulated derivative market from now on.

 

[Kauri]

Well, the Dow 30 finished 449 points down on reflection on all these dud banking institutions still trading as ghosts in the night.

Halifax Bank of Scotland, one of the biggest UK banks was in fact bankrupt. Only the intervention of Lloyds TSB Bank, with unknown prompting from the Bank of England, may have saved the day.
If Lloyds pull out, then the UK Government may have to pour in untold billion of pounds.

Royal Bank of Scotland are also wobbling badly and could yet go down.

New York Times is reporting that Morgan Stainsley is considering a merger with Wachovia or another bank in a desperate attempt to save itself from fate of its peers, Lehman Brothers and Bear Stearns. With the CDS market basically untradeable, the current investment bank model is dead unless one can join forces. ( any IB's in Aussie??? )Morgan Stanley shares fell 25% overnight.
Lloyds TSB has agreed to buy rival HBOS in the latest forced merger due to a funding squeeze. HBOS has been under mounting pressure due to its reliance on wholesale markets to fund its business. HBOS had lost more than half of its value in the last six-days.
The New York Times reports that Washington Mutual whose shares have fallen 94% in the last 12 months has put itself up for auction. Goldman Sachs has started the auction process with potential bidders suggested to be JPMorgan and Wells Fargo.

Now why is Gold surging???

Cheers
............Kauri

 

[noirua]

New York Times is reporting that Morgan Stainsley is considering a merger with Wachovia or another bank in a desperate attempt to save itself from fate of its peers, Lehman Brothers and Bear Stearns. With the CDS market basically untradeable, the current investment bank model is dead unless one can join forces. ( any IB's in Aussie??? )Morgan Stanley shares fell 25% overnight.
Lloyds TSB has agreed to buy rival HBOS in the latest forced merger due to a funding squeeze. HBOS has been under mounting pressure due to its reliance on wholesale markets to fund its business. HBOS had lost more than half of its value in the last six-days.
The New York Times reports that Washington Mutual whose shares have fallen 94% in the last 12 months has put itself up for auction. Goldman Sachs has started the auction process with potential bidders suggested to be JPMorgan and Wells Fargo.

Now why is Gold surging???

Cheers
............Kauri

Trouble is that a lot of these banks may be worth less than zero. Thank heavens, I kept religiously to my plan of keeping 70% to 80% of my investment monies in cash or fixed interest.
There may be great problems now but I'm buying a stock here and there.
Gold is the only international currency. There could be a few countries imploding here.

 

[Kauri]

bouts of EUR/JPY selling aside, the EUR/USD appears poised to move higher. Faith in Wall Street as a major financial center is deteriorating and faith in US authorities to manage the crisis is waning. Expectations that the Fed and Treasury will print money to climb out of the crisis should support the hard currencies such as the EUR and encourage central banks to speed up USD-diversification efforts. Methinks we have gone past fear stage and are now firmly entrenched in terror..
Cheers
............Kauri

 

[noirua]

The US Fed is thought to be about to declare "limit in", no more money left to borrow. Has had to issue $100 billion bonds to expand balance sheet.
AIG is likely to be the last rescue, the rest go down.

The AUD is getting close to A$1.30 to the US$1.

 

[Kauri]

The US Fed is thought to be about to declare "limit in", no more money left to borrow. Has had to issue $100 billion bonds to expand balance sheet.
AIG is likely to be the last rescue, the rest go down.

The AUD is getting close to A$1.30 to the US$1.

news that the US Treasury was going to provide financing to help prop up the Fed's balance sheet broadly undermined the US dollar, as Wall Street in the epicenter of the global financial market destruction.. well... who nose??

Cheers
...........Kauri

 

[Bushman]

Who is starting to sniff a return to Isolationism?

 

[Kauri]

[FONT=Arial,Helvetica,sans-serif]"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." - Thomas Jefferson[/FONT]

Cheers
.................Kauri

 

[gfresh]

The US Fed is thought to be about to declare "limit in", no more money left to borrow. Has had to issue $100 billion bonds to expand balance sheet. AIG is likely to be the last rescue, the rest go down.

That indeed is a scary thought, because the rest are still probably enough to bring down even some of the merged entities. If there is no capital left to save them, then...

On the bright side I guess, at least this is all coming to a head fairly quickly.. within the next 1-3 weeks we should know whether the entire financial system implodes, or whether a new landscape can be forged that will allow survival. Then again, those house prices - how the heck can they be stabilised so quickly?

Consumer panic could be the big one, and I'm surprised it hasn't happened a little over in the US & UK already.. when everybody rushes to withdraw their savings. Then the government steps in to ban it in the interest of "national security". Nobody has access to their own money, until it's "safe" to do so

Have to love some of the quotes out there right now, with bankers running around with their heads chopped off. Here is a re-assuring snippet:

One shell-shocked senior banker in London said that there was no future left for the traditional investment bank. “The world is on the brink. The market is puking all over us. There’s no capital left in the world,” he said.

 

[noirua]

That indeed is a scary thought, because the rest are still probably enough to bring down even some of the merged entities. On the bright side I guess, at least this is all coming to a head fairly quickly.. within the next 2-3 weeks we should know whether the entire financial system implodes, or whether a new landscape can be forged that will allow survival. Then again, those house prices - how the heck can they be stabilised so quickly?

Consumer panic could be the big one, and I'm surprised it hasn't happened a little over in the US & UK already.. when everybody rushes to withdraw their savings. Then the government steps in to ban it in the interest of "national security". Nobody has access to their own money, until it's "safe" to do so

Have to love some of the quotes out there right now, with bankers running around with their heads chopped off. Here is a re-assuring snippet:

UK investors are fully covered for the first AU$80,000 (£35,000) if a bank goes under. Different rules apply if the Bank is a foreign one: I think the foreign banks domain rules apply, could be wrong though. Also, investors with the Northern Rock Bank are fully covered for everything.
In America, State Law applies to some Banks and Federal Laws to others. Too complicated to list.